Morgan Stanley would buy alternative asset managers on ‘overdone’ weakness

Morgan Stanley analyst Michael Cyprys notes that alternative asset managers’ shares underperformed the broader market by 75 basis points and financials by 122 basis points yesterday as President Trump outlined his tax priorities in a meeting with House GOP leaders, including a proposal to close the carried interest loophole. The firm sees no risk to earnings or cashflow in most scenarios, given alternative asset managers are tax paying corporations and no longer partnerships, says the analyst, who calls the concerns related to the proposal “overdone.” While management teams could raise compensation to offset a higher individual tax burden, the firm views that as “highly unlikely,” the analyst added.